Green energy cost hits record high as expensive turbines built at sea

Annual bill for consumers to subsidise renewable technologies has soared to
more than £2.5bn as more plants are built and the cost for each unit of
electricity rises

The increase reflects the drive to build wind turbines at sea, which receive roughly twice as much subsidy as those built onshore, where wind farms have proved increasingly controversial.Photo: Emily Gosden

The cost of generating green electricity has hit a record high as subsidies are handed to expensive offshore wind farms and household solar panels, new figures show.

The annual bill for consumers to subsidise renewable technologies has soared to more than £2.5bn as more turbines are built and households install panels on their roofs.

But new figures show that the average cost for each unit of green electricity has also increased, hitting a record high of £66.97 per MWh in 2012-13, the most recent period for which figures are available.

The figure was a rise from £54.26 the year before, despite pledges from ministers to bear down on the costs of green energy.

The increase reflects the drive to build wind turbines at sea, which receive roughly twice as much subsidy as those built onshore, where wind farms have proved increasingly controversial.

Subsidies paid to energy companies for this kind of large-scale project reached £2bn, from £1.5bn a year before.

The new figures also reflect the rush by tens of thousands of households to install solar panels on their roofs at generous subsidy levels before ministers cut support in March 2012. The bill for this kind of small-scale subsidy leapt to £500m in 2012-13, from £150m the year before.

Dr John Constable, director of Renewable Energy Foundation, a UK charity that has long been critical of the costs of the renewables targets, said: “DECC is subsidising renewables to meet arbitrary and over-ambitious EU targets, so it was inevitable that we would move rapidly up the cost curve once the ‘cheaper' opportunities had either been fully developed like landfill gas or exceeded the limits of public acceptability like onshore wind.”

He added: “Subsidy costs are now spiralling out of control - the annual burn is about £3bn a year and rising fast. There still is a good case for experimenting with renewables, but building so much capacity when the whole sector is still fundamentally uneconomic is bound to end in tears.”

A spokesman for the Department of Energy and Climate Change said: “As we move closer to achieving the government’s renewables target it is inevitable we will start using more expensive forms of renewable energy such as offshore wind, which can be deployed at far greater scale than other renewable technologies. By supporting these technologies now we are driving down their costs.

“Nonetheless the support levels for each technology are coming down over time and our analysis suggests household electricity bills will be on average £41 lower per year between 2014-30 compared to meeting the our targets using current measures.”